Renault-Nissan to take over AvtoVAZ

Renault- Nissan venture is thriving with the sharing of technology between the French and Japanese brand. More interestingly, the joint venture is planning to overtake Russia’s largest automaker, AvtoVAZ.

In recent reports, Renault-Nissan and state corporation Russian Technologies have announced plans to form a joint-venture, controlling AvtoVAZ. Renault- Nissan will invest a sum of $750 million that will increase their share in AvtoVAZ from 25 per cent to 67 per cent. And the addition of Russian Technologies to the venture gives the group a total stake of 74.5 per cent. With the initial deals between Renault-Nissan and Russian Technologies signed, the final deal is expected to close by 2014.

Russia is emerging as the fastest growing market in Europe, with a 39 per cent swell in the current year as compared to last year. In figures, the sales skyrocketed at 2.65 million sales as compared to last year. This is the probable reason why Renault-Nissan showed interest in buying the stakes of AvtoVAZ.

There is another side to this story. AvtoVAZ currently has a 33 per cent share in the Russian market. Although the company does not have a fabulous lineup of cars, it is doing spectacularly well in the market. This gives Renault-Nissan a chance to offer its technologies to the Russian buyer and share it with AutoVAZ. Moreover, AvtoVAZ is also the owner of Lada brand. For AvtoVAZ, this could be an opportunity to rejuvenate its Lada brand and launch new models once the deal is signed.

“Today’s memorandum is the latest step in an expanding collaboration that helps modernise the leader of Russia’s auto industry,” said Renault-Nissan Alliance Chairman and CEO Carlos Ghosn. “Just as Renault and Nissan will continue their technology transfer to AVTOVAZ plants, our AVTOVAZ colleagues will contribute more and more to the Alliance’s multicultural management bench.”